WESBANCO INC

Previous wording

Forward-looking statements in this report relating to Wesbanco’s plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The information contained in this report should be read in conjunction with Wesbanco’s Form 10-Qs for the prior quarters ended March 31, June 30 and September 30, 2023, respectively, and documents subsequently filed by Wesbanco which are available at the SEC’s website, www.sec.gov or at Wesbanco’s website, www.wesbanco.com. Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, including those detailed under “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements, including, without limitation, the effects of changing regional and national economic conditions, changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to Wesbanco and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve, the FDIC, the SEC, FINRA, the Municipal Securities Rulemaking Board, the SIPC, and other regulatory bodies; potential legislative and federal and state regulatory actions and reform, including, without limitation, the impact of the implementation of the Dodd-Frank Act; adverse decisions of federal and state courts; fraud, scams and schemes of third parties; cyber security breaches; competitive conditions in the financial services industry; rapidly changing technology affecting financial services; marketability of debt instruments and corresponding impact on fair value adjustments; and/or other external developments materially impacting Wesbanco’s operational and financial performance. Wesbanco does not assume any duty to update forward-looking statements.

Current wording

Forward-looking statements in this report relating to Wesbanco’s plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The information contained in this report should be read in conjunction with Wesbanco’s Form 10-Qs for the prior quarters ended March 31, June 30 and September 30, 2024, respectively, and documents subsequently filed by Wesbanco which are available at the SEC’s website, www.sec.gov or at Wesbanco’s website, www.wesbanco.com. Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, including those detailed under “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements, including, without limitation, that the businesses of Wesbanco and Premier may not be integrated successfully or such integration may take longer to accomplish than expected; the expected cost savings and any revenue synergies from the merger of Wesbanco and Premier may not be fully realized within the expected timeframes; disruption from the merger of Wesbanco and Premier may make it more difficult to maintain relationships with clients, associates, or suppliers; the effects of changing regional and national economic conditions, changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to Wesbanco and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau, the SEC, the Financial Institution Regulatory Authority, the Municipal Securities Rulemaking Board, the Securities Investors Protection Corporation, and other regulatory bodies; potential legislative and federal and state regulatory actions and reform, including, without limitation, the impact of the implementation of the Dodd-Frank Act; adverse decisions of federal and state courts; fraud, scams and schemes of third parties; cyber-security breaches; competitive conditions in the financial services industry; rapidly changing technology affecting financial services; marketability of debt instruments and corresponding impact on fair value adjustments; and/or other external developments materially impacting Wesbanco’s operational and financial performance. Wesbanco does not assume any duty to update forward-looking statements.

Previous wording

The allowance for credit losses specific to loans reduces the loan portfolio to the net amount expected to be collected, representing the lifetime expected credit losses at the initial origination date. Similarly, an allowance for unfunded loan commitments, which is recorded in other liabilities, represents expected losses on unfunded commitments. Fluctuations in the allowance for credit losses specific to loans, the allowance for unfunded loan commitments, and the allowance for held-to-maturity debt securities are recognized in the provision for credit losses on the consolidated statement of operations. The allowance incorporates forward-looking information and applies a reversion methodology beyond the reasonable and supportable forecast. The allowance is increased by a provision charged to operating expense and reduced by charge-offs, net of recoveries. Management evaluates the appropriateness of the allowance at least quarterly. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change from period to period.

Current wording

Allowance for Credit Losses— The allowance for credit losses specific to loans reduces the loan portfolio to the net amount expected to be collected, representing the lifetime expected credit losses at the initial origination date. Similarly, an allowance for unfunded loan commitments, which is recorded in other liabilities, represents expected losses on unfunded commitments. Fluctuations in the allowance for credit losses specific to loans, the allowance for unfunded loan commitments, and the allowance for held-to-maturity debt securities are recognized in the provision for credit losses on the consolidated statement of operations. The allowance incorporates forward-looking information and applies a reversion methodology beyond the reasonable and supportable forecast. The allowance is increased by a provision charged to operating expense and reduced by charge-offs, net of recoveries. Management evaluates the appropriateness of the allowance at least quarterly. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change from period to period.

Previous wording

The allowance for credit losses specific to loans reflects the risk of loss in the loan portfolio. To appropriately measure expected credit losses, management disaggregates the loan portfolio into pools of similar risk characteristics. The Company utilizes the PD / LGD approach to calculate the expected loss for each segment, which is then discounted to net present value. PD is the probability the asset will default within a given timeframe and LGD is the percentage of the assets not expected to be collected due to default. The primary macroeconomic drivers of the quantitative model include forecasts of national unemployment and interest rate spreads. Management relies on macroeconomic forecasts obtained from various reputable sources, which may include the Federal Open Market Committee forecast and other third party forecasts from well recognized, leading economists. These forecasts can range from one to two years, depending upon the facts and circumstances of the current state of the economy, portfolio segment and management’s judgment of what can be reasonably supported. The model reversion period can range from immediate to up to three years.

Current wording

The allowance for credit losses specific to loans reflects the risk of loss in the loan portfolio. To appropriately measure expected credit losses, management disaggregates the loan portfolio into pools of similar risk characteristics. The Company utilizes the PD / LGD approach to calculate the expected loss for each segment, which is then discounted to net present value. PD is the probability the asset will default within a given timeframe and LGD is the percentage of the assets not expected to be collected due to default. The primary macroeconomic drivers of the quantitative model include forecasts of national unemployment and interest rate spreads, as well as modeling adjustments for changes in prepayment speeds, portfolio mix and loan growth. Management relies on macroeconomic forecasts obtained from various reputable third party sources. These forecasts can range from one to two years, depending upon the facts and circumstances of the current state of the economy, portfolio segment and management’s judgment of what can be reasonably supported. The model reversion period can range from immediate to up to three years.

Previous wording

Allowance for Credit Losses— Under CECL, acquired loans or pools of loans that have experienced more-than-insignificant credit deterioration are deemed to be purchased credit-deteriorated (“PCD”) loans, and are grossed-up on day 1 by the initial credit estimate through the allowance as opposed to a reduction in the loan’s amortized cost. The credit mark on acquired loans deemed not to be PCD loans are reflected as a reduction in the loan’s amortized cost, with an allowance and corresponding provision for credit losses recorded in the first reporting period after acquisition through current period earnings, while the loan mark will accrete through interest income over the life of such loans. At acquisition, Wesbanco will consider several factors as indicators that an acquired loan or pool of loans has experienced more-than-insignificant credit deterioration. These factors may include, but are not limited to, loans 30 days or more past due, loans with an internal risk grade of below average or lower, loans classified as non-accrual by the acquired institution, materiality of the credit and loans that have been previously modified. Upon adoption of this standard, acquired loans from prior acquisitions that met the guidelines under ASC 310-30 (formerly known as “purchased credit-impaired”) were reclassified as PCD loans. The accretable portion of the loan mark as of adoption date continues to accrete into interest income. However, the non-accretable portion of the loan mark was added to the allowance upon adoption, and any reversals of such mark will flow through the allowance in future periods. The loan mark on ASC 310-20 loans (“non-purchased credit-impaired”) from prior acquisitions continues to accrete through interest income over the life of such loans.

Current wording

Under CECL, acquired loans or pools of loans that have experienced more-than-insignificant credit deterioration are deemed to be purchased credit-deteriorated (“PCD”) loans, and are grossed-up on day 1 by the initial credit estimate through the allowance as opposed to a reduction in the loan’s amortized cost. The credit mark on acquired loans deemed not to be PCD loans are reflected as a reduction in the loan’s amortized cost, with an allowance and corresponding provision for credit losses recorded in the first reporting period after acquisition through current period earnings, while the loan mark will accrete through interest income over the life of such loans. At acquisition, Wesbanco will consider several factors as indicators that an acquired loan or pool of loans has experienced more-than-insignificant credit deterioration. These factors may include, but are not limited to, loans 30 days or more past due, loans with an internal risk grade of below average or lower, loans classified as non-accrual by the acquired institution, materiality of the credit and loans that have been previously modified. Upon adoption of this standard, acquired loans from prior acquisitions that met the guidelines under ASC 310-30 (formerly known as “purchased credit-impaired”) were reclassified as PCD loans. The accretable portion of the loan mark as of adoption date continues to accrete into interest income. However, the non-accretable portion of the loan mark was added to the allowance upon adoption, and any reversals of such mark will flow through the allowance in future periods. The loan mark on ASC 310-20 loans (“non-purchased credit-impaired”) from prior acquisitions continues to accrete through interest income over the life of such loans.

Previous wording

Wesbanco evaluates goodwill for impairment by determining if the fair value is greater than the carrying value of its reporting units. Wesbanco uses market capitalization, multiples of tangible book value, a discounted cash flow model, and various other market-based methods to estimate the current fair value of its reporting units. In particular, the discounted cash flow model includes various assumptions regarding an investor’s required rate of return on Wesbanco common stock, future loan loss provisions, future market spreads and net interest margins, along with various growth and economic recovery and stabilization assumptions of the economy as a whole. The resulting fair values of each method are then weighted based on the relevance and reliability of each respective method in light of the current economic environment to arrive at a weighted average fair value. The evaluation also considered macroeconomic conditions such as the general economic outlook, regional and national unemployment rates, and recent trends in equity and credit markets. Additionally, industry and market considerations, such as market-dependent multiples and metrics relative to peers, were evaluated. Wesbanco also considered recent trends in credit quality, overall financial performance, stock price appreciation, internal forecasts and various other market-based methods to estimate the current fair value of its reporting units. Since adopting ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350)”, the impairment charge is based on the excess of a reporting unit’s carrying amount over its fair value. Wesbanco completed its annual goodwill impairment evaluation as of November 30, 2023. There were no indications of impairment as of November 30, 2023 nor December 31, 2023 as there were no significant change in market conditions, consolidated operating results or forecasted future results from November 30, 2023.

Current wording

Wesbanco evaluates goodwill for impairment by determining if the fair value is greater than the carrying value of its reporting units. Wesbanco uses market capitalization, multiples of tangible book value, a discounted cash flow model, and various other market-based methods to estimate the current fair value of its reporting units. In particular, the discounted cash flow model includes various assumptions regarding an investor’s required rate of return on Wesbanco common stock, future loan loss provisions, future market spreads and net interest margins, along with various growth and economic recovery and stabilization assumptions of the economy as a whole. The resulting fair values of each method are then weighted based on the relevance and reliability of each respective method in light of the current economic environment to arrive at a weighted average fair value. The evaluation also considered macroeconomic conditions such as the general economic outlook, regional and national unemployment rates, and recent trends in equity and credit markets. Additionally, industry and market considerations, such as market-dependent multiples and metrics relative to peers, were evaluated. Wesbanco also considered recent trends in credit quality, overall financial performance, stock price appreciation, internal forecasts and various other market-based methods to estimate the current fair value of its reporting units. Since adopting ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350)”, the impairment charge is based on the excess of a reporting unit’s carrying amount over its fair value. Wesbanco completed its annual quantitative goodwill impairment evaluation as of November 30, 2024, and concluded that there were no indications of impairment. In addition, as there were no significant changes in market conditions, consolidated operating results or forecasted future results after November 30, 2024, it was concluded that at December 31, 2024, there were also no indications of impairment.

Previous wording

Through successful operational execution, Wesbanco generated solid annual net income, while remaining a well-capitalized institution with sound liquidity and credit quality metrics. For the twelve months ended December 31, 2023, net income available to common shareholders was $148.9 million, or $2.51 per diluted share, as compared to $182.0 million, or $3.02 per diluted share, for the twelve months ended December 31, 2022. Net income available to common shareholders excluding after-tax restructuring and merger-related expenses (non-GAAP measure) was $151.9 million, or 2.56 per diluted share for the year ended December 31, 2023. These decreases were due in large part to the higher funding costs for both deposits and borrowings, inflationary cost pressures, and the recording of provision expense as compared to the benefit of a release of provision for credit losses in the prior year. Interest income increased $197.9 million or 38.5% to $711.5 million in 2023 compared to 2022. Net interest income increased $7.0 million or 1.5% from 2022, primarily due to loan growth and a rising rate environment. Non-interest income increased $3.1 million or 2.6% in 2023 compared to 2022, driven by a $2.7 million increase in net securities gains, and a $1.0 million increase in net gains on other real estate owned and other assets. Excluding restructuring and merger-related expenses, non-interest expense increased $30.9 million or 8.7%, driven by increases in FDIC insurance, salaries and wages, employee benefits and marketing expense.

Current wording

Through successful operational execution, Wesbanco generated solid annual net income, while remaining a well-capitalized institution with sound liquidity and credit quality metrics. For the twelve months ended December 31, 2024, net income available to common shareholders was $141.4 million, or $2.26 per diluted share, as compared to $148.9 million, or $2.51 per diluted share, for the twelve months ended December 31, 2023. Net income available to common shareholders excluding after-tax restructuring and merger-related expenses (non-GAAP measure) was $146.4 million, or $2.34 per diluted share for the year ended December 31, 2024. These decreases were due in large part to the higher funding costs for both deposits and borrowings, inflationary cost pressures, and the recording of a larger provision expense as compared to the prior year. Interest income increased $114.1 million or 16.0% to $825.6 million in 2024 compared to 2023. Net interest income decreased $3.1 million or 0.7% from 2023, primarily due to higher funding costs. Non-interest income increased $7.5 million or 6.3% in 2024 compared to 2023, driven by a $3.9 million increase in service charges on deposits, a $2.5 million increase in trust fees and a $1.6 million increase in mortgage banking income. Excluding restructuring and merger-related expenses, non-interest expense increased $9.3 million or 2.4%, driven by increases in other operating, equipment and software, FDIC insurance, salaries and wages expense.

Previous wording

Total assets as of December 31, 2023 were $17.7 billion, an increase of 4.6% as compared to December 31, 2022. As of December 31, 2023, total portfolio loans were $11.6 billion compared to $10.7 billion at December 31, 2022, reflecting an 8.7% increase year-over year. The loan growth funding is reflected within the increase in total borrowings of $615.8 million or 73.3% at December 31, 2023 compared to December 31, 2022. Criticized and classified loan balances decreased to 2.22% of total portfolio loans, as compared to 2.34% at December 31, 2022. Annualized net loan charge-offs to average loans for the full year period increased to four basis points compared to two basis points in 2022. Deposits remained steady in 2023, increasing by 0.3% from December 31, 2022.

Current wording

Total assets as of December 31, 2024 were $18.7 billion, an increase of 5.5% as compared to December 31, 2023. As of December 31, 2024, total portfolio loans were $12.7 billion compared to $11.6 billion at December 31, 2023, reflecting an 8.7% increase year-over year. The loan growth funding is reflected within the increase in total deposits of $965.0 million or 7.3% at December 31, 2024 compared to December 31, 2023. Criticized and classified loan balances increased to 2.80% of total portfolio loans, as compared to 2.22% at December 31, 2023. Annualized net loan charge-offs to average loans for the full year period increased seven basis points compared to 2023.

Previous wording

Wesbanco continues to maintain what we believe are strong regulatory capital ratios, as both consolidated and bank-level regulatory capital ratios are well above the applicable “well-capitalized” standards promulgated by bank regulators and the BASEL III capital standards. At December 31, 2023, Tier I leverage was 9.87%, Tier I risk-based capital was 12.05%, total risk-based capital was 14.91%, and the common equity Tier 1 capital ratio was 10.99%.

Current wording

Wesbanco continues to maintain what we believe are strong regulatory capital ratios, as both consolidated and bank-level regulatory capital ratios are well above the applicable “well-capitalized” standards promulgated by bank regulators and the BASEL III capital standards. At December 31, 2024, Tier I leverage was 10.68%, Tier I risk-based capital was 13.06%, total risk-based capital was 15.88%, and the common equity Tier 1 capital ratio was 12.07%.

Previous wording

Strong earnings enabled Wesbanco to increase the quarterly dividend to $0.36 per share in the fourth quarter of 2023, the seventeenth increase over the last thirteen years, cumulatively representing a 157% increase over that period.

Current wording

Strong earnings enabled Wesbanco to increase the quarterly dividend to $0.37 per share in the fourth quarter of 2024, the eighteenth increase over the last fourteen years, cumulatively representing a 164% increase over that period.

Previous wording

For the twelve months ended December 31, 2023, net income available to common shareholders was $148.9 million, or $2.51 per diluted share, compared to $182.0 million, or $3.02 per diluted share. Net income available to common shareholders for the twelve months ended December 31, 2023 decreased 18.2% compared to 2022, while diluted per share earnings decreased 16.9%.

Current wording

For the year ended December 31, 2024, net income available to common shareholders was $141.4 million, or $2.26 per diluted share, compared to $148.9 million, or $2.51 per diluted share for the year ended December 31, 2023. Net income available to common shareholders for the year ended December 31, 2024 decreased 5.1% compared to 2023, while diluted per share earnings decreased 10.0%.

Previous wording

For the twelve months ending December 31, 2023, net interest income increased $7.0 million, or 1.5%, primarily due to loan growth and the benefit of rising rates on earning assets. The increase in net interest income was offset in part by a decrease in the net interest margin of six basis points to 3.14% in 2023 as compared to 2022 due to the overall higher rate environment and its effect on the rate paid on interest bearing liabilities. Average loan balances increased 10.4% in 2023, mostly due to a lower level of commercial real estate payoffs and a strong performance by the commercial and residential lending teams, while average investment securities decreased 7.4% over the same period. Total average deposits decreased in 2023 by $600.5 million or 4.4% compared to 2022, due to customer preferences in the higher interest rate environment.

Current wording

For the year ended December 31, 2024, net interest income decreased $3.1 million or 0.7%, primarily due to higher funding costs offsetting the impact of loan growth and higher earning asset yields year-to-date. This also resulted in a decrease in the net interest margin of 18 basis points to 2.96% in 2024 as compared to 2023 due to the overall higher rate environment and its effect on the rate paid on interest bearing liabilities. Average loan balances increased 9.5% in 2024, mostly due to a lower level of commercial real estate payoffs and continued strong performance by the commercial and residential lending teams, while average investment securities decreased 7.4% over the same period. Total average deposits increased in 2024 by $630.3 million or 4.9% compared to 2023, due to customer preferences in the higher interest rate environment and deposit gathering initiatives implemented by management.

Previous wording

The following comments on non-interest expense exclude restructuring and merger-related expenses in both years. Non-interest expense in 2023 increased $30.9 million or 8.7% compared to 2022, while the efficiency ratio increased in 2023 to 63.6% from 59.5% in 2022. The primary drivers of this increase was a $9.9 million increase in salaries and wages due to annual merit increases and new revenue-producing hires, which were mainly commercial lenders, and a $9.1 million increase in employee benefits resulting from higher deferred compensation expense and higher health insurance expense. FDIC insurance expense, as well as equipment and software and marketing expenses, also increased from 2022. These increases were slightly offset by lower amortization expense on intangible assets.

Current wording

The following comments on non-interest expense exclude restructuring and merger-related expenses in both years. Non-interest expense in 2024 increased $9.3 million or 2.4% compared to 2023, while the efficiency ratio increased in 2024 to 64.7% from 63.6% in 2023. The primary drivers of this increase were a $5.3 million increase in other operating expenses, a $4.6 million increase in equipment and software expenses and a $2.0 million increase in FDIC insurance expense. These increases were slightly offset by decreases in marketing expense, employee benefits expense and lower amortization expense on intangible assets.

Previous wording

The provision for federal and state income taxes decreased to $35.0 million in 2023 compared to $44.3 million in 2022, due primarily to lower pre-tax income in 2023. The effective tax rate was 18.1% and 18.7% for the years ended December 31, 2023 and 2022, respectively. Wesbanco recognized $3.7 million and $3.5 million in New Markets Tax Credits for the years ended December 31, 2023 and 2022, respectively.

Current wording

The provision for federal and state income taxes decreased to $33.6 million in 2024 compared to $35.0 million in 2023, due primarily to lower pre-tax income in 2024. The effective tax rate was 18.2% and 18.1% for the years ended December 31, 2024 and 2023, respectively. Wesbanco recognized $3.8 million and $3.7 million in New Markets Tax Credits for the years ended December 31, 2024 and 2023, respectively.

Previous wording

Net interest income, which is Wesbanco’s largest source of revenue, is the difference between interest income on earning assets, primarily loans and securities, and interest expense on liabilities, primarily deposits and short and long-term borrowings. Net interest income is affected by the general level of, and changes in interest rates, the steepness and shape of the yield curve, changes in the amount and composition of interest earning assets and interest bearing liabilities, as well as the frequency of repricing of existing assets and liabilities. Net interest income increased $7.0 million or 1.5% in 2023 compared to 2022, primarily due to loan growth and the benefit of rising rates on earning assets and was mitigated by a six basis point decrease in the net interest margin over the same time period. Rates were impacted from the 525 basis point increase in the federal funds rate since the first quarter of 2022. Purchase accounting accretion decreased in 2023, as approximately three basis points of accretion from prior acquisitions was included in the 2023 net interest margin as compared to six basis points in the 2022 net interest margin. Total average deposits, excluding CDs, decreased in 2023 by $510.8 million or 4.1% compared to 2022, due to increased competition for deposits during the higher rate environment. The cost of interest bearing deposits increased by 148 basis points and the cost of total liabilities increased by 183 basis points from 2022 to 2023. The increase in the cost is primarily due to the effect of the previously mentioned federal funds rate increases on the rates paid on interest bearing demand deposits, customer repurchase agreements, term Federal Home Loan Bank borrowings and junior subordinated debentures.

Current wording

Net interest income, which is Wesbanco’s largest source of revenue, is the difference between interest income on earning assets, primarily loans and securities, and interest expense on liabilities, primarily deposits and short and long-term borrowings. Net interest income is affected by the general level of, and changes in interest rates, the steepness and shape of the yield curve, changes in the amount and composition of interest earning assets and interest bearing liabilities, as well as the frequency of repricing of existing assets and liabilities. Net interest income decreased $3.1 million or 0.7% in 2024 compared to 2023, primarily due to higher funding costs offsetting the impact of loan growth and higher earning assets year-to-date. Rates were impacted from the 525 basis point increase in the federal funds rate since the first quarter of 2022, while federal funds rates did see a 100 basis point cut late in 2024, the interest rate environment generally remained elevated. Total average deposits, excluding CDs, increased in 2024 by $171.5 million or 1.4% compared to 2023, due to the success of deposit gathering and retention. The cost of interest bearing deposits increased by 97 basis points and the cost of total liabilities increased by 82 basis points from 2023 to 2024. The increase in the cost is primarily due to the effect of the previously mentioned federal funds rate increases on the rates paid on interest bearing demand deposits, customer repurchase agreements, term Federal Home Loan Bank borrowings and junior subordinated debentures.

Previous wording

Interest income increased $197.9 million or 38.5% in 2023 compared to 2022 due to higher yields in most of the major earning asset categories. Earning asset yields were influenced positively in 2023 compared to 2022 from the previously mentioned increases in the Federal Reserve’s federal funds rate of 525 basis points since the first quarter of 2022. Average loan balances increased $1.0 billion or 10.4% in 2023 compared to 2022, due to commercial hiring efforts. Loan yields increased by 117 basis points during 2023 to 5.36% due to the previously mentioned higher rate environment and its effect on the repricing of portfolio loans, as well as higher offered rates on new loans. Loans provide the greatest impact on interest income and the yield on earning assets as they have the largest balance and the highest yield within major earning asset categories. In 2023, average loans represented 72.0% of average earning assets, an increase from 67.4% in 2022. Taxable securities yields increased by 42 basis points in 2023 due to the effect of the higher rate environment on the variable rate portion of the investment portfolio, which are typically tied to SOFR. Decreased prepayments on mortgage-backed securities in the higher rate environment also further benefited the taxable securities yields due to reduced amortization on securities purchased at a premium. Tax-exempt securities yields increased by two basis points in 2023 from 2022. The average balance of tax-exempt securities, which have the highest yields within securities, increased from 18.6% of total average securities in 2022 to 19.9% of total average securities in 2023.

Current wording

Interest income increased $114.1 million or 16.0% in 2024 compared to 2023 due to higher yields in most of the major earning asset categories. Earning asset yields were influenced positively in 2024 compared to 2023 from the previously mentioned increases in the Federal Reserve’s federal funds rate of 525 basis points since the first quarter of 2022. Average loan balances increased $1.1 billion or 9.5% in 2024 compared to 2023, due to strong performance by banking teams across all markets. Loan yields increased by 47 basis points during 2024 to 5.83% due to the previously mentioned higher rate environment and its effect on the repricing of portfolio loans, as well as higher offered rates on new loans. Loans provide the greatest impact on interest income and the yield on earning assets as they have the largest balance and the highest yield within major earning asset categories. In 2024, average loans represented 74.8% of average earning assets, an increase from 72.0% in 2023. Taxable securities yields increased by 11 basis points in 2024 due to higher yields on new purchases. Decreased prepayments on mortgage-backed securities in the higher rate environment also further benefited the taxable securities yields due to reduced amortization on securities purchased at a premium. Tax-exempt securities yields increased by two basis points in 2024 from 2023. The average balance of tax-exempt securities, which have the highest yields within securities, increased from 19.9% of total average securities in 2023 to 20.5% of total average securities in 2024.

Previous wording

Interest expense increased $190.8 million in 2023 as compared to 2022, due to increases in the cost of all interest bearing liability categories in the higher rate environment. The cost of interest bearing liabilities increased by 183 basis points from 2022 to 2.25% in 2023. Average interest bearing deposits decreased by $208.0 million or 2.3% from 2022 to 2023. The rate on interest bearing deposits increased 148 basis points to 1.75% in 2023 as compared to 2022, primarily from increases in rates on interest bearing demand deposits, money market accounts and savings deposits in response to competitive pressures from higher market rates. Average non-interest bearing demand deposit balances decreased from 2022 to 2023 by $392.5 million or 8.3%, and were 33.2% of total average deposits at December 31, 2023, compared to 34.7% at December 31, 2022. The average balance of FHLB borrowings increased by $963.1 million from 2022 to 2023 due to the funding of loan growth. New higher-rate borrowings taken out in 2023 increased the average rate by 294 basis points to 5.21% from 2.27% in 2022. Average repurchase agreements combined with average subordinated debt and junior subordinated debt balances increased $2.8 million or 0.7% from 2022 to 2023, and their average rates paid increased by 181 and 147 basis points, respectively, over this same time period, due primarily to increases in SOFR, the index upon which this variable-rate type of borrowing is priced.

Current wording

Interest expense increased $117.3 million in 2024 as compared to 2023, due to increases in the cost of most interest bearing liability categories in the higher rate environment. The cost of interest bearing liabilities increased by 82 basis points from 2023 to 3.07% in 2024. Average interest bearing deposits increased by $1.1 billion or 12.5% from 2023 to 2024. The rate on interest bearing deposits increased 97 basis points to 2.72% in 2024 as compared to 2023, primarily from increases in rates on interest bearing demand deposits, money market accounts and savings deposits in response to competitive pressures from higher market rates. Average non-interest bearing demand deposit balances decreased from 2023 to 2024 by $452.9 million or 10.5%, and were 28.4% of total average deposits at December 31, 2024, compared to 33.2% at December 31, 2023. The average balance of FHLB borrowings increased by $26.1 million from 2023 to 2024 to maintain liquidity needs. New higher-rate borrowings taken out in 2024 increased the average rate by 16 basis points to 5.37% from 5.21% in 2023. Average repurchase agreements balances increased $9.7 million or 8.4% from 2023 to 2024, while their average rate paid increased by 95 basis points due to the impact from the higher rate environment. Subordinated and junior subordinated debt balances and average rates remained relatively flat from 2023 to 2024.

Previous wording

Gross of allowance for credit losses and net of unearned income. Includes non-accrual and loans held for sale. Loan fees included in interest income on loans were $2.7 million, $8.8 million and $26.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. As part of loan fees, PPP loan fees were $0.2 million, $5.9 million and $25.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. Additionally, loan accretion included in interest income on loans acquired from prior acquisitions was $4.5 million, $8.0 million and $13.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Current wording

Gross of the allowance for credit losses, net of unearned income and includes non-accrual loans and loans held for sale. Loan fees included in interest income on loans were $2.9 million, $2.7 million and $8.8 million for the years ended December 31, 2024, 2023 and 2022, respectively. As part of loan fees, PPP loan fees were $0.2 million and $5.9 million for the years ended December 31, 2023 and 2022, respectively. Additionally, loan accretion included in interest income on loans acquired from prior acquisitions was $3.1 million, $4.5 million and $8.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Previous wording

Accretion on interest bearing liabilities acquired from prior acquisitions was $0.5 million, $1.1 million and $3.1 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Current wording

Accretion on interest bearing liabilities acquired from prior acquisitions was $0.2 million, $0.5 million and $1.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Previous wording

The provision for credit losses – loans is the amount to be added to the allowance for credit losses – loans after net charge-offs have been deducted to bring the allowance to a level considered appropriate to absorb lifetime expected losses for all portfolio loans. The provision for credit losses – loan commitments is the amount to be added to the allowance for credit losses for loan commitments to bring that allowance to a level considered appropriate to absorb lifetime expected losses on unfunded loan commitments. The provision for credit losses - loans and loan commitments was $17.8 million in 2023 compared to ($1.7) million in 2022 as a result of loan growth as well as changes in macroeconomic conditions over the reasonable and supportable forecast period of one year, primarily increasing the allowance for loan losses and allowance for loan commitments. Furthermore, the increase to the provision was driven by qualitative factors, which addressed the risk of rising interest rates and office portfolio concentration. Non-performing loans were 0.23% of total loans as of December 31, 2023, and decreased from 0.39% of total loans at the end of 2022. Non-performing assets were 0.24% of total loans and other real estate and repossessed assets as of December 31, 2023, decreasing from 0.40% at the end of 2022. Criticized and classified loans were 2.22% of total loans, decreasing from 2.34% as of December 31, 2022, primarily due to improvements in loans categorized as criticized or classified during the pandemic. Past due loans at December 31, 2023 were 0.28% of total loans, compared to 0.19% at December 31, 2022. (Please see the Credit Quality and Allowance for Credit Losses – Loans and Loan Commitments section of this MD&A for additional discussion).

Current wording

The provision for credit losses – loans is the amount to be added to the allowance for credit losses – loans after net charge-offs have been deducted to bring the allowance to a level considered appropriate to absorb lifetime expected losses for all portfolio loans. The provision for credit losses – loan commitments is the amount to be added to the allowance for credit losses for loan commitments to bring that allowance to a level considered appropriate to absorb lifetime expected losses on unfunded loan commitments. The provision for credit losses - loans and loan commitments was $19.3 million in 2024 compared to $17.8 million in 2023 as a result of loan growth as well as changes in macroeconomic conditions over the reasonable and supportable forecast period of one year, primarily increasing the allowance for loan losses. Furthermore, the increase to the provision was driven by an increase in individually evaluated loans, specifically within the CRE portfolio. Non-performing loans were 0.31% of total loans as of December 31, 2024, and increased from 0.23% of total loans at the end of 2023. Non-performing assets were 0.32% of total loans and other real estate and repossessed assets as of December 31, 2024, increasing from 0.24% at the end of 2023. Criticized and classified loans were 2.80% of total loans, increasing from 2.22% as of December 31, 2023, primarily due to downgrades within the CRE portfolio. Past due loans at December 31, 2024 were 0.47% of total loans, compared to 0.28% at December 31, 2023. (Please see the Credit Quality and Allowance for Credit Losses – Loans and Loan Commitments section of this MD&A for additional discussion).

Previous wording

Non-interest income is a significant source of revenue and an important part of Wesbanco’s results of operations, as it represented 20.0% and 19.8% of total revenue for 2023 and 2022, respectively. Wesbanco offers its customers a wide range of retail, commercial, investment and electronic banking services, which are viewed as a vital component of Wesbanco’s ability to attract and maintain customers, as well as providing additional fee income beyond normal spread-related income to Wesbanco. Non-interest income increased $3.1 million or 2.6% in 2023 compared to 2022, primarily due to increases in trust fees, net securities gains (losses), and net gains on other real estate owned and other assets. The increases were slightly offset by a decrease in mortgage banking income.

Current wording

Non-interest income is a significant source of revenue and an important part of Wesbanco’s results of operations, as it represented 21.1% and 20.0% of total revenue for 2024 and 2023, respectively. Wesbanco offers its customers a wide range of retail, commercial, investment and electronic banking services, which are viewed as a vital component of Wesbanco’s ability to attract and maintain customers, as well as providing additional fee income beyond normal spread-related income to Wesbanco. Non-interest income increased $7.5 million or 6.3% in 2024 compared to 2023, primarily due to increases in trust fees, service charges on deposits, mortgage banking income, and other income. The increases were slightly offset by decreases in net swap fee and valuation income, bank-owned life insurance and net gains on other real estate owned and other assets.

Previous wording

Trust fees increased $0.6 million or 2.1% in 2023 compared to 2022. Trust assets of $5.4 billion at December 31, 2023, increased from $4.9 billion at December 31, 2022. As of December 31, 2023, trust assets include managed assets of $4.4 billion and non-managed (custodial) assets of $1.0 billion. Assets managed for the WesMark Funds, a proprietary group of mutual funds that is advised by Wesbanco Trust and Investment Services, were $0.8 billion as of December 31, 2023 and December 31, 2022, and are included in managed assets.

Current wording

Trust fees increased $2.5 million or 9.0% in 2024 compared to 2023. Trust assets of $6.0 billion at December 31, 2024, increased from $5.4 billion at December 31, 2023. As of December 31, 2024, trust assets include managed assets of $4.8 billion and non-managed (custodial) assets of $1.1 billion. Assets managed for the WesMark Funds, a proprietary group of mutual funds that is advised by Wesbanco Trust and Investment Services, were $0.9 billion as of December 31, 2024 and $0.8 billion as of December 31, 2023, and are included in managed assets.

Previous wording

Swap fee and valuation income, which includes fair value adjustments, decreased $0.2 million or 2.2% in 2023 as compared to 2022. The decrease was specifically due to negative fair value adjustments on the swap portfolio in 2023 resulting from the late year market rate decreases, which outweighed a record amount of new swaps originated and their associated swap fee income. In 2023, new swaps totaled $728.7 million in notional principal resulting in $9.0 million in fee income, compared to new swaps totaling $254.3 million in notional principal resulting in $4.4 million in fee income in 2022. Fair market value adjustments on swaps in 2023 totaled a negative $2.1 million as compared to a positive $2.7 million in 2022.

Current wording

Net swap fee and valuation income, which includes fair value adjustments, decreased $1.0 million or 14.0% in 2024 as compared to 2023. The decrease was specifically due to a decrease in the amount of new swaps originated and their associated swap fee income and was partially offset by positive fair value adjustments. In 2024, new swaps totaled $494.8 million in notional principal resulting in $4.9 million in fee income, compared to new swaps totaling $728.7 million in notional principal resulting in $9.0 million in fee income in 2023. Fair market value adjustments on swaps in 2024 totaled a positive $1.0 million as compared to a negative $2.1 million in 2023.

Previous wording

Mortgage banking income decreased $2.5 million or 48.3% in 2023 compared to 2022, due primarily to a decrease in fair value adjustments on mortgage derivatives and increased deferred loan costs on mortgage loans. In 2023, total mortgage production was $0.7 billion, which was a decrease of 32.0% from total production in 2022. In 2023, $293.4 million in mortgages were sold into the secondary market as compared to $227.5 million in 2022. Included in mortgage banking income are gains of $0.8 million and $3.2 million from the fair value adjustments on mortgage loan commitments and related derivatives for 2023 and 2022, respectively.

Current wording

Mortgage banking income increased $1.6 million or 61.0% in 2024 compared to 2023, due to more residential mortgages sold in the secondary market, as well as an associated wider gain-on-sale margin. In 2024, total mortgage production was $0.6 billion, which was a decrease of 13.0% from total production in 2023. In 2024, $307.8 million in mortgages were sold into the secondary market as compared to $293.4 million in 2023. Included in mortgage banking income is a loss of $0.1 million and a gain of $0.8 million from the fair value adjustments on mortgage loan commitments and related derivatives for 2024 and 2023, respectively.

Previous wording

Non-interest expense in 2023, excluding restructuring and merger-related expenses, increased $30.9 million or 8.7% compared to 2022. The primary drivers of this increase were higher salaries and wages, employee benefits, equipment and software costs, FDIC insurance expense and other operating expenses. These increases were slightly offset by decreases in net occupancy and amortization of intangible assets. Restructuring and merger related expenses of $3.8 million in 2023 and $1.7 million in 2022 were attributable to branch restructuring that occurred in both years.

Current wording

Non-interest expense in 2024, excluding restructuring and merger-related expenses, increased $9.3 million or 2.4% compared to 2023. The primary drivers of this increase were higher equipment and software costs, FDIC insurance, professional fees, and postage, supplies and other expenses. These increases were slightly offset by decreases in employee benefits, marketing, amortization of intangible assets, and ATM and electronic banking and interchange expenses. Restructuring and merger-related expenses were $6.4 million in 2024 and $3.8 million in 2023, and are described in more detail below.

Previous wording

Equipment and software costs increased $4.2 million or 12.8% in 2023 compared to 2022, due to continuous improvements in technology and communication infrastructure, general inflationary cost increases for existing service agreements and increased usage of digital banking services. During 2023, Wesbanco upgraded most of its ATM fleet.

Current wording

Equipment and software costs increased $4.6 million or 12.6% in 2024 compared to 2023, due to continuous improvements in technology and communication infrastructure, including the prior year ATM upgrades, which were phased in throughout 2023, general inflationary cost increases for existing service agreements and increased usage of digital banking services.

Previous wording

Restructuring and merger-related expenses in 2023 totaled $3.8 million, an increase from $1.7 million incurred in 2022. The $3.8 million of expenses in 2023 consisted of fixed asset writedowns, lease termination expenses and severance expenses associated with the closure of branches, back-office buildings and a restructuring of the residential mortgage department. The restructuring and merger-related expenses in 2022 totaling $1.7 million were comprised of branch closure and lease termination expenses associated with the closure of 13 branches throughout 2022.

Current wording

Restructuring and merger-related expenses in 2024 totaled $6.4 million, an increase from $3.8 million incurred in 2023. The $6.4 million of expenses in 2024 consisted of $3.5 million for the restructuring due to branch optimization and $2.9 million related to the Premier acquisition. The restructuring and merger-related expenses in 2023 totaling $3.8 million consisted of fixed asset writedowns, lease termination expenses and severance expenses associated with the closure of branches, back-office buildings and a restructuring of the residential mortgage department.

Previous wording

ATM and electronic banking interchange expenses increased $1.2 million or 20.1% in 2023 as compared to 2022, due to higher ACH and ATM processing charges resulting from an increase in transaction volume.

Current wording

ATM and electronic banking interchange expenses decreased $1.1 million or 15.1% in 2024 as compared to 2023, due to cost savings resulting from the consolidation of third party card service providers, and were slightly offset by an increase in transaction volume.

Previous wording

The provision for income taxes was $35.0 million for 2023, which is a $9.3 million decrease as compared to $44.3 million in 2022. The decrease in the provision for income taxes is due in part to a decrease in the effective tax rate to 18.1% in 2023 compared to 18.7% in 2022. In addition, the decrease resulted from lower pre-tax income in 2023 as compared to 2022. The decrease in pre-tax income is primarily driven by the $17.7 million provision for credit losses recorded in 2023, as compared to a $1.7 million negative provision for credit losses in 2022, and an increase in non-interest expense.

Current wording

The provision for income taxes was $33.6 million for 2024, which is a $1.4 million decrease as compared to $35.0 million in 2023. The decrease in the provision for income taxes is due to a decrease in pre-tax income from 2023 to 2024, and is slightly offset by an increase in the effective tax rate from 18.1% in 2023 to 18.2% in 2024. The decrease in pre-tax income is primarily driven by lower net interest income and higher non-interest expense in 2024 as compared to 2023.

Previous wording

Total assets, deposits and shareholders' equity increased 4.6%, 0.3% and 4.4%, respectively, at December 31, 2023 compared to December 31, 2022. Total securities decreased $383.1 million or 10.1% from December 31, 2022 to December 31, 2023, as investment maturities, paydowns and calls were used to fund loan growth. Total portfolio loans increased $935.7 million or 8.7% in 2023 driven by strong performance from our commercial and residential lending teams. Total deposits increased $37.6 million or 0.3% from year end 2022 reflecting the benefit of deposit gathering and retention efforts by our retail and commercial teams. Reflecting the impact of the significant increase in the federal funds rate, there continued to be some mix shift in the composition of total deposits; however, total demand deposits continue to represent 56% of total deposits, with the non-interest bearing component representing 30%, which remains consistent with the percentage range since early 2020.

Current wording

Total assets, deposits and shareholders' equity increased 5.5%, 7.3% and 10.2%, respectively, at December 31, 2024 compared to December 31, 2023. Total securities increased $6.3 million or 0.2% from December 31, 2023 to December 31, 2024, as investment runoff was reinvested in the purchase of new securities. Total portfolio loans increased $1.0 billion or 8.7% in 2024 driven by strong performance from our commercial and residential lending teams. Total deposits increased $1.0 billion or 7.3% from year end 2023 reflecting the benefit of deposit gathering and retention efforts by our retail and commercial teams. Reflecting the impact of a higher federal funds rate, there continued to be some mix shift in the composition of total deposits; however, total demand deposits continue to represent 54% of total deposits, with the non-interest bearing component representing 27%, which remains consistent with the percentage range since early 2020.

Previous wording

Deposit balances were also somewhat impacted by bonus and royalty payments from Marcellus and Utica shale energy companies in Wesbanco’s southwestern Pennsylvania, eastern Ohio and northern West Virginia markets totaling $104.7 million and $96.7 million for the years ended December 31, 2023 and December 31, 2022, respectively. The increase in certificates of deposit of $345.9 million is primarily due to customers' preferences during the higher interest rate environment. Total borrowings increased 54.7% or $613.5 million during 2023, as loan growth increased and required additional funding generated through FHLB borrowings.

Current wording

Deposit balances were also somewhat impacted by bonus and royalty payments from Marcellus and Utica shale energy companies in Wesbanco’s southwestern Pennsylvania, eastern Ohio and northern West Virginia markets. The increase in certificates of deposit of $495.2 million is primarily due to customers' preferences during the higher interest rate environment. Total borrowings decreased 15.2% or $263.6 million during 2024, as deposit growth increased and required less funding generated through FHLB borrowings.

Previous wording

Total shareholders’ equity increased $106.4 million or 4.4%, compared to December 31, 2022, primarily due to net income of $159.0 million for the year ended December 31, 2023, and a $35.7 million other comprehensive gain exceeding the declaration of common and preferred shareholder dividends totaling $82.9 million and $10.1 million, respectively.

Current wording

Total shareholders’ equity increased $257.2 million or 10.2%, compared to December 31, 2023, primarily due to the capital raise of $191.0 million, net income of $151.5 million for the year ended December 31, 2024, and a $8.1 million other comprehensive gain exceeding the declaration of common and preferred shareholder dividends totaling $90.8 million and $10.1 million, respectively.

Previous wording

Total held-to-maturity debt securities are presented on the Consolidated Balance Sheets net of their allowance for credit losses totaling $0.2 million at December 31, 2023 and December 31, 2022, respectively.

Current wording

Total held-to-maturity debt securities are presented on the Consolidated Balance Sheets net of their allowance for credit losses totaling $0.1 million and $0.2 million at December 31, 2024 and December 31, 2023, respectively.

Previous wording

Total investment securities, which are a source of liquidity for Wesbanco as well as a contributor to interest income, decreased by $383.1 million or 10.1% from December 31, 2022 to December 31, 2023. Over the same period, the available-for-sale portfolio decreased by $334.8 million or 13.2% primarily driven by $315.9 million in paydowns, $31.0 million in sales and $25.3 million in maturities and calls, and was slightly offset by a decrease of $38.7 million in unrealized losses. The held-to-maturity portfolio decreased by $49.1 million or 3.9% primarily due to maturities and calls of municipal bonds. The weighted average yield of the total portfolio increased seven basis points from 2.45% at December 31, 2022 to 2.52% at December 31, 2023, primarily due to increases in the indices tied to variable rate securities.

Current wording

Total investment securities, which are a source of liquidity for Wesbanco as well as a contributor to interest income, decreased by $6.2 million or 0.2% from December 31, 2023 to December 31, 2024. Throughout the year, the available-for-sale portfolio increased by $51.7 million or 2.4%, primarily due to $383.4 million in purchases and an $11.8 million decrease in unrealized losses, which were partially offset by $275.0 million in paydowns and $65.6 million in maturities and calls. The held-to-maturity portfolio decreased by $46.6 million or 1.0% due to maturities and calls of municipal securities. The weighted average yield of the portfolio increased 15 basis points from 2.52% at December 31, 2023 to 2.67% at December 31, 2024, primarily due to higher yields on purchased securities.

Previous wording

Total gross unrealized securities losses decreased $72.4 million, from $510.7 million as of December 31, 2022 to $438.3 million at December 31, 2023. The decrease in unrealized losses from December 31, 2022 was due to the overall decrease in investment balances combined with a decrease in market rates during late 2023 causing market prices to increase on the investment portfolio. Wesbanco believes that none of the unrealized losses on available-for-sale debt securities at December 31, 2023 require an allowance for credit losses. Please refer to Note 3, “Securities,” of the Consolidated Financial Statements for additional information. Wesbanco does not have any investments in private mortgage-backed securities or those that are collateralized by sub-prime mortgages, nor does Wesbanco have any exposure to collateralized debt obligations or government-sponsored enterprise preferred stocks.

Current wording

Total gross unrealized securities losses increased $3.4 million, from $438.3 million as of December 31, 2023 to $441.7 million at December 31, 2024. The increase in unrealized losses from December 31, 2023 was due to an increase in market rates throughout 2024 causing market prices to decrease on the investment portfolio. Wesbanco believes that none of the unrealized losses on available-for-sale debt securities at December 31, 2024 require an allowance for credit losses. Please refer to Note 4, “Securities,” of the Consolidated Financial Statements for additional information. Wesbanco does not have any investments in private mortgage-backed securities or those that are collateralized by sub-prime mortgages, nor does Wesbanco have any exposure to collateralized debt obligations or government-sponsored enterprise preferred stocks.

Previous wording

Net unrealized losses on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of December 31, 2023 and December 31, 2022 were $233.2 million and $261.8 million, respectively. These net unrealized pre-tax losses represent temporary fluctuations resulting from changes in market rates in relation to fixed yields in the available-for-sale portfolio, and on an after-tax basis are accounted for as an adjustment to other comprehensive income in shareholders’ equity. Net unrealized pre-tax losses in the held-to-maturity portfolio, which are not accounted for in other comprehensive income, were $130.4 million at December 31, 2023, compared to $164.2 million as of December 31, 2022. With approximately 35% of the investment portfolio in the held-to-maturity category, the recent volatility in interest rates does not have as much of an impact on other comprehensive income as if the entire portfolio were included in the available-for-sale category.

Current wording

Net unrealized losses on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of December 31, 2024 and December 31, 2023 were $223.8 million and $233.2 million, respectively. These net unrealized pre-tax losses represent temporary fluctuations resulting from changes in market rates in relation to fixed yields in the available-for-sale portfolio, and on an after-tax basis are accounted for as an adjustment to other comprehensive income in shareholders’ equity. Net unrealized pre-tax losses in the held-to-maturity portfolio, which are not accounted for in other comprehensive income, were $146.1 million at December 31, 2024, compared to $130.4 million as of December 31, 2023. With approximately 34% of the investment portfolio in the held-to-maturity category, the recent movement in interest rates does not have as much of an impact on other comprehensive income as that of the available-for-sale category.

Previous wording

Wesbanco uses prices from independent pricing services and, to a lesser extent, indicative (non-binding) quotes from independent brokers, to measure the fair value of its securities. Wesbanco validates prices received from pricing services or brokers using a variety of methods, including, but not limited to, comparison to secondary pricing services, corroboration of pricing by reference to other independent market data such as secondary broker quotes and relevant benchmark indices, review of pricing by personnel familiar with market liquidity and other market-related conditions, review of pricing service methodologies, review of independent auditor reports received from the pricing service regarding its internal controls, and through review of inputs and assumptions used in pricing certain securities thinly-traded or with limited observable data points. The procedures in place provide management with a sufficient understanding of the valuation models, assumptions, inputs and pricing to reasonably measure the fair value of Wesbanco’s securities. For additional disclosure relating to fair value measurement, refer to Note 16, “Fair Value Measurement” in the Consolidated Financial Statements.

Current wording

Wesbanco uses prices from independent pricing services and, to a lesser extent, indicative (non-binding) quotes from independent brokers, to measure the fair value of its securities. Wesbanco validates prices received from pricing services or brokers using a variety of methods, including, but not limited to: (1) comparison to secondary pricing services; (2) corroboration of pricing by reference to other independent market data such as secondary broker quotes and relevant benchmark indices; (3) review of pricing by personnel familiar with market liquidity and other market-related conditions; (4) review of pricing service methodologies; (5) review of independent auditor reports received from the pricing service regarding its internal controls; and (6) through review of inputs and assumptions used in pricing certain securities thinly-traded or with limited observable data points. The procedures in place provide management with a sufficient understanding of the valuation models, assumptions, inputs and pricing to reasonably measure the fair value of Wesbanco’s securities. For additional disclosure relating to fair value measurement, refer to Note 17, “Fair Value Measurement” in the Consolidated Financial Statements.

Previous wording

The corporate and municipal bonds in Wesbanco’s held-to-maturity debt portfolio are analyzed quarterly to determine if an allowance for current expected credit losses is warranted. Wesbanco uses a database of historical financials of all corporate and municipal issuers and actual historic default and recovery rates on rated and non-rated transactions to estimate expected credit losses on an individual security basis. The expected credit losses are adjusted quarterly and are recorded in an allowance for expected credit losses on the balance sheet, which is deducted from the amortized cost basis of the held-to-maturity portfolio as a contra asset. The losses are recorded on the income statement in the provision for credit losses. Accrued interest receivable on held-to-maturity securities, which was $8.8 million and $9.5 million as of December 31, 2023 and 2022, respectively, is excluded from the estimate of credit losses. Held-to-maturity investments in U.S. Government sponsored entities and agencies as well as mortgage-backed securities and collateralized mortgage obligations, which are all either issued by a direct governmental entity or a government-sponsored entity, have no historical evidence supporting expected credit losses; therefore, Wesbanco has estimated these losses at zero, and will monitor this assumption in the future for any economic or governmental policies that could affect this assumption. Wesbanco recorded an allowance on held-to-maturity debt securities of $0.2 million as of December 31, 2023 and 2022, respectively.

Current wording

The corporate and municipal bonds in Wesbanco’s held-to-maturity debt portfolio are analyzed quarterly to determine if an allowance for current expected credit losses is warranted. Wesbanco uses a database of historical financials of all corporate and municipal issuers and actual historic default and recovery rates on rated and non-rated transactions to estimate expected credit losses on an individual security basis. The expected credit losses are adjusted quarterly and are recorded in an allowance for expected credit losses on the balance sheet, which is deducted from the amortized cost basis of the held-to-maturity portfolio as a contra asset. The losses are recorded on the income statement in the provision for credit losses. Accrued interest receivable on held-to-maturity securities, which was $8.4 million and $8.8 million as of December 31, 2024 and 2023, respectively, is excluded from the estimate of credit losses. Held-to-maturity investments in U.S. Government sponsored entities and agencies as well as mortgage-backed securities and collateralized mortgage obligations, which are all either issued by a direct governmental entity or a government-sponsored entity, have no historical evidence supporting expected credit losses; therefore, Wesbanco has estimated these losses at zero, and will monitor this assumption in the future for any economic or governmental policies that could impact this assumption. Wesbanco recorded an allowance on held-to-maturity debt securities of $0.1 million and $0.2 million as of December 31, 2024 and 2023, respectively.

Previous wording

Cost-method investments consist primarily of FHLB of Pittsburgh stock totaling $62.0 million and $36.2 million at December 31, 2023 and 2022, respectively, and are included in other assets in the Consolidated Balance Sheets.

Current wording

Cost-method investments consist primarily of FHLB of Pittsburgh stock totaling $48.2 million and $62.0 million at December 31, 2024 and 2023, respectively, and are included in other assets in the Consolidated Balance Sheets.

Previous wording

Wesbanco’s municipal portfolio comprises 35.6% of the overall securities portfolio as of December 31, 2023 compared to 33.5% as of December 31, 2022, which carries different risks that are not as prevalent in other security types contained in the portfolio. The following table presents the allocation of the individual bonds in the municipal bond portfolio based on the combined ratings of two major bond credit rating agencies (at fair value):

Current wording

Wesbanco’s municipal portfolio comprises 34.2% of the overall securities portfolio as of December 31, 2024 compared to 35.6% as of December 31, 2023, which carries different risks that are not as prevalent in other security types contained in the portfolio. The following table presents the allocation of the individual bonds in the municipal bond portfolio based on the combined ratings of two major bond credit rating agencies (at fair value):

Previous wording

Wesbanco’s municipal bond portfolio at December 31, 2023, consists of $386.9 million of taxable and $699.4 million of tax-exempt general obligation and revenue bonds. The following table presents additional information regarding the municipal bond type and issuer (at fair value):

Current wording

Wesbanco’s municipal bond portfolio at December 31, 2024, consists of $371.3 million of taxable and $653.3 million of tax-exempt general obligation and revenue bonds. The following table presents additional information regarding the municipal bond type and issuer (at fair value):